Coming out from the initial choppiness, Indian equity benchmarks staged splendid performance on Wednesday, extending their northward journey for second straight session to end near their crucial 9,900 (Nifty) and 31,800 (Sensex) levels. Markets traded drearily in early deals, as traders remained concerned with wholesale inflation rising to 1.88 percent in July as prices of some commodities increased in the first month of Goods and Services Tax (GST) rollout. Higher Retail inflation too dampened traders' mood as it rose to 2.36% in the month of July. However, key gauges gathered momentum in afternoon session and started moving northward, as traders took some encouragement with statements by the Prime Minister Narendra Modi who on 70th Independence Day promising to lead the country on a new track of economic progress, said his government would intensify the fight against black money and corruption. Adding to the optimism, India's trade deficit narrowed to $11.45 billion in July from a month ago, following a slowdown in merchandise imports. Also, recording a growth of over 3.9 percent on the back of a healthy rise in shipments of engineering goods, petroleum products and chemicals, Indian exports in July grew at $22.5 billion. Market extended their rally and ended near intraday high levels on report that Markets regulator SEBI notified relaxed norms for stake purchase in distressed listed companies by lenders, exempting them from making open offers for shareholders. The relaxation will be subject to certain conditions, including shareholders' approval of the stake acquisition by way of special resolution. Some support also came with a foreign brokerage report highlighting that India's growth momentum will get stronger with revival in private investment cycle and real GDP growth is expected to average at about 7.4 percent over 2017 and 2018. It also termed as faulty the argument that a 7.5-8 percent real GDP growth in the next few years will still be lower than what was achieved in the boom period of 2006-2008. Finally, the BSE Sensex soared 321.86 points or 1.02% to 31,770.89, while the CNX Nifty was up by 103.15 points or 1.05% to 9,897.30.

The US markets closed moderately higher on Wednesday, restoring the Dow above the psychologically-important 22,000 mark, after Federal Reserve minutes suggested that the central bank is wrestling with sluggish inflation but eager to commence an unwind of its $4.5 trillion asset portfolio. The market's gains came after a volatile session, reflecting uncertainty about the strategic path for the central bank and political tensions facing President Donald Trump that could disrupt his pro-growth agenda. Meanwhile, Federal Reserve policymakers appeared increasingly wary about recent weak inflation and some called for halting interest rate hikes until it was clear the trend was transitory, according to the minutes of the US central bank's last policy meeting. The readout of the July 25-26 meeting, also indicated the Fed was poised to begin reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities. On the economy front, builders broke ground on fewer homes in July, but new-home construction continues to grind slowly and steadily higher, supporting a gradually improving housing market. Housing starts ran at a 1.16 million seasonally adjusted annual rate. That's 4.8% below June's pace, and 5.6% lower compared to a year ago. The Dow Jones Industrial Average gained 25.88 points or 0.12 percent to 22,024.87, the Nasdaq added 12.10 points or 0.19 percent to 6,345.11, while the S&P 500 edged higher by 3.50 points or 0.14 percent to 2,468.11. 

Crude oil futures extended their weakness on Wednesday on data showing U.S. crude production rose to its highest in over two years. The report offset a decline in supplies of U.S. crude for a seventh-straight week. The Energy Information Administration (EIA) reported that Inventories of U.S. crude fell by roughly 8.9m barrels in the week ended Aug 11. Gasoline inventories, unexpectedly rose by roughly 22,000 barrels, while distillate stockpiles rose by 702,000 barrels. The report also highlighted total crude-oil production rose to 9.502m barrels per day, an uptick of 79,000 barrels a day compared to last week. Benchmark crude oil futures for September delivery ended down by $0.77 or 0.1 percent to $46.78 on the New York Mercantile Exchange. In London, Brent crude for September delivery ended lower by $0.43 at $50.37 a barrel on the ICE.

Indian rupee pared some of its early losses but ended marginally weaker against the American currency on Wednesday, due to fresh dollar demand from banks and importers amid foreign fund outflows. Investors remained concerned after retail inflation increased to 2.36% in July from 1.46% in June, wholesale inflation rose to 1.88%, showing effects of implementation of GST and 7th Pay Commission. This effectively shoots down the probability of any near-term interest rate cut by the Reserve Bank of India (RBI). Besides, strength in the US dollar against some other currencies overseas too weighed on the rupee sentiment. Though, splendid gains of local equities limited further depreciation of Indian currency. On the global front, dollar held near a three-week high on Wednesday against a trade-weighted basket of its rivals as strong US retail sales data boosted risk appetite. Finally, the rupee ended at 64.15, 3 paise weaker from its previous close of 64.12 on Monday.

The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3288.81 crore against gross selling of Rs 4812.62 crore, while in the debt segment, the gross purchase was of Rs 292.38 crore with gross sales of Rs 489.78 crore.

The US markets moved higher in the last session, , with the Dow Jones Industrial Average up for a fourth day despite political turmoil in Washington DC. There was some cautiousness with minutes from the Federal Reserve that showed that the central bank is contending with sluggish inflation. The Asian markets have made mostly a positive start led by technology shares, however, the Japanese market was in red after the yen jumped and the dollar extended a decline after Federal Reserve meeting minutes reduced the odds of another U.S. interest rate increase this year. The Indian markets recovering from the early choppiness rallied in the last session, and the major averages posted gains of over a percent on getting some good macro data. Today, the start is likely to remain in green and the markets will be adding gains on supportive global cues. On the domestic front traders will be getting some support with the government raising estimate on food grain output for the crop year ended June on an increase in the estimated yields of paddy and wheat. Traders will also be reacting to minutes from the last meeting of Monetary Policy Committee whose members said easing inflation had supported the need for a rate cut at its August meeting, but warned consumer prices could start accelerating. Meanwhile, American think-tank Council on Foreign Relations' Senior Fellow for India Alyssa Ayers has said that the country has emerged as a strong world power but still has 'a long way to go'. There will be some cautiousness too, with Sebi asking BSE and NSE to initiate audit on 100 out of 331 suspected shell companies, in which the regulator had restricted trading recently.  The Tata group stocks will be buzzing today, as the board of Tata Sons under has ordered its group companies to scrap all business dealings with Cyrus and Shapoor Mistry's SP Group.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• ONGC is planning to double gas production to over 100 million standard cubic meters per day in the next 5-6 years.
• Wipro has won a five-year IT infrastructure and applications managed services engagement with Grameenphone.
• ITC has all set to launch -- potatoes, tomatoes and onions -- in the packaged foods category across the frozen, chilled, cool and ambient shelf-life segments.
• Tata Power's generation capacity increased by close to 13 percent in Q1 FY18 as compared to Q1 FY17.